TLDR
- Alibaba launched Qwen 3.5, its upgraded AI model with agentic capabilities for complex multistep tasks and “vibe coding” features
- The model ranks higher than OpenAI’s GPT-5.2, Anthropic’s Claude Opus 4.5, and Google’s Gemini 3 Pro on several benchmarks
- Qwen 3.5 is 60% cheaper to use and eight times better at processing large workloads than its predecessor
- An open-source version was released, making it particularly attractive for programming and custom applications
- U.S. corporate adoption may be limited due to concerns about Chinese AI access to private data and geopolitical tensions
Alibaba unveiled Qwen 3.5 on Monday, marking another step forward for Chinese AI companies competing with U.S. tech giants. The launch comes as the software sector faces mounting pressure from rapid advances in AI coding capabilities.
The new model features agentic AI capabilities, allowing it to perform complex multistep tasks autonomously. According to Alibaba, Qwen 3.5 outperforms OpenAI’s GPT-5.2, Anthropic’s Claude Opus 4.5, and Google’s Gemini 3 Pro on several industry benchmarks.
Performance and Cost Advantages
Qwen 3.5 operates on a hybrid architecture with 397 billion total parameters but only activates 17 billion per forward pass. This design optimizes processing speed while maintaining capability.
The company claims the model is 60% cheaper to use than its predecessor. It also processes large workloads eight times faster, making it attractive for cost-conscious developers.
Alibaba released an open-source version of Qwen 3.5. Open-source models have become a key strategy for Chinese AI companies looking to gain market share against closed U.S. systems.
The model supports “vibe coding,” converting natural language instructions into functional code. It can iterate on projects in real time and handle creative tasks like generating videos or other digital assets.
U.S. Market Adoption Challenges
American companies remain cautious about using Chinese AI technology. Data privacy concerns and geopolitical tensions could limit Qwen 3.5’s penetration in U.S. markets.
The Pentagon recently added Alibaba to a list of companies backed by the Chinese military. The update was later withdrawn without explanation, but the incident highlights ongoing scrutiny.
Fears of future U.S. restrictions may deter American businesses from adopting Chinese AI models. This could shield U.S. software companies from some competitive pressure despite Qwen 3.5’s technical capabilities.
The software sector has faced selling pressure over AI’s ability to rapidly produce custom applications. These fears intensified after Anthropic’s Claude demonstrated powerful coding abilities in recent weeks.
Alibaba shares fell 0.5% in Hong Kong following the announcement. U.S. markets were closed for Presidents Day, and Hong Kong trading was shortened for Lunar New Year’s Eve.
The Qwen 3.5 launch follows ByteDance’s upgraded Doubao chatbot, which has nearly 200 million users. ByteDance also released Seedance 2.0, an AI video generator that drew both praise and copyright concerns.
Other Chinese AI companies have rolled out new models recently. Zhipu unveiled GLM-5, trained entirely on Chinese chips, while MiniMax released M2.5 and Moonshot AI launched Kimi K2.5.
DeepSeek plans to release its V4 model later this month. Reports suggest it could outperform ChatGPT and Claude on tasks involving long coding prompts.
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